Telecoms industry lost R80 billion last year due to government – Vodacom

The telecommunications industry in South Africa lost R80 billion in market cap last year due to policy and regulatory uncertainty, said Vodacom CEO Shameel Joosub.

Joosub was addressing the Department of Telecommunications at a workshop on the ECA Amendment Bill.

Vodacom said the department’s update of the draft Bill failed to incorporate the outcomes of several discussions the department had with industry players over the past year.

In particular, the updated Bill does not mention the “hybrid option” plan, which involve operators receiving a portion of available spectrum and a government-sanctioned wholesale open access network (WOAN) receiving a block of spectrum.

The wireless frequency spectrum in question represents additional network capacity that is suited to rolling out wider 4G coverage in South Africa, reducing prices, and improving network performance.

Instead of the hybrid option, Vodacom said the draft Bill currently proposes the following problematic actions:

Holding back the licensing of high-demand spectrum until the WOAN is functional.

Taking back licensed spectrum from operators to give it to the WOAN.

Cost-based wholesale access.

The threat of losing their spectrum has caused uncertainty in the market, which was reflected in the share prices of network operators.

“We have R100 billion that we’ve invested into our network. If we have to return the spectrum, it becomes expropriation. That investment becomes useless,” said Joosub.

While Vodacom disagrees with the Bill in its current form, there are aspects it thinks could work.

A WOAN in a hybrid model will force small players to work together, pooling their money for more efficient network investment, said Vodacom.

Instead of each competitor investing R3 billion per year to compete with Vodacom and MTN’s network investments of over R9 billion each, entities like Cell C and Telkom could pool their resources through the WOAN, said Joosub.